Posts Tagged ‘12 20 08’

In the NYT Op Ed entitled, “The Madoff Economy,” Friday, December 19, 2008 Nobel Prize winning Paul Krugman starts his with these paragraphs:
“The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend.
Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?”
No, Mr. Krugman, you are not the only person who asks this question. I have too. And, I believe, so should everyone.
Krugman then goes on to cite some striking statistics supporting the notion that the financial services industry has gotten rich while the people that hired and trusted them haven’t. This data and other information suggests that the financial services industry, rather than protecting the very investors that made them rich, have only destroyed the value of their portfolios. Some examples that support this concept from Krugman’s op-ed:
“Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special and even incomes of $20 million or more were fairly common.”
“In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse.”
There is an old joke, “Your investment specialist is interested in retirement planning. The problem is that it is his own, not yours.” Now, we know this bitter statement rings more true than we thought. Perhaps it isn’t a joke?
For some constructive ways for you to take more control of your own investments, please see my achieved articles on MyMoneyMD.com.